markets report bitcoin price
Bitcoin,  Markets Report

Markets Report: Bitcoin will bounce between $30K-$40K as altcoins awaken

A giant $10,000 range opens up for Bitcoin, setting the stage for altcoins to take advantage of the money, traders argue

Bitcoin is completing an impressive trading week during which it both lost and gained more than 30%. 

With intense volatility and periods of unnerving calm characterizing the market, investors are nervous about what could happen on long and short timeframes—even the weekend may produce surprises.

To $30,000 and back again in five days

Bitcoin began Monday with a continuation of a sell-off which had set in during Sunday. After a weekend of losses, the start of the trading week sparked a snowball effect for BTC/USD, which soon plunged all the way from $42,000 to $30,000.

$30,000 support would end up forming the floor level throughout the coming days as Bitcoin lurched around in its new lower trading zone. Nonetheless, the rebound from Monday’s dive marked the cryptocurrency’s strongest one-day performance in history at one point, gains passed $6,500.

The stage was thus set for a tussle between bulls and bears. This produced ranging price behavior which last unchanged as various narratives emerged to guide sentiment upwards or downwards. 

Only on Thursday did the atmosphere change on spot markets, with Bitcoin breaking through crucial resistance at $38,000 to quickly, but briefly, reclaim $40,000. A subsequent rejection at that level reinforced ranging as the market state of choice for Bitcoin. 

Nevertheless, bulls had shown their metal—even after a $12,000 correction, Bitcoin could still make up almost all its lost ground in a matter of days. Naysayers claiming that the market had suffered a 2017-style crash were thus left almost instantly disappointed.

“#Bitcoin reached an all-time high at $41,500, crashed to $30,000, and is back at $40,000 in one week,” popular trader Michaël van de Poppe summarized. 

“Last year #Bitcoin was trading at $7,500.”

Enter compression

With another wild week behind it, Bitcoin has established the parameters for some more familiar trading activity.

According to Van de Poppe, the zone between $30,000 and $40,000 should now host Bitcoin for the short term, as it enters a period of consolidation. This will see volatility and trading volume “drain away” on a temporary basis, he explained in a YouTube update on Friday, but eventually, strength will ignite once more and Bitcoin will race upwards again.

“Chopping around in a range is used for reaccumulation, distribution; it’s for compression,” he said. 

“And then you have the compression, a build-up of strength and then you start to see a new impulse wave at a later stage.”

markets report bitcoin price
Bitcoin taps $40,000 on January 14. Source: TradingView

Compression refers to a series of lower highs and higher lows on the chart forming a tightening wedge which at some point demands a breakout to avoid complete stagnation. This formed a feature of the Bitcoin story during 2020, particularly following May’s block subsidy halving and a strengthening of the US dollar in September. After both compression periods, Bitcoin violated the paradigm and broke out.

“…It’s very natural that after such a massive impulse wave as we’ve just witnessed that the market starts to calm down, that volatility starts to drain away, volume starts to drain away from Bitcoin—and that’s when you see altcoins are starting to pace up,” Van de Poppe added. 

New all-time highs begin to emerge for altcoins

Altcoins are indeed beginning to take the limelight from Bitcoin. At press time, three of the top 100 cryptocurrencies by market cap had posted weekly gains of 250% or more, with Polkadot (DOT) among those hitting new all-time highs.

Market leader Ether (ETH) meanwhile stood at $1,225, up 7.1% on the day and firmly above the $1,000 mark once more. 

markets report bitcoin price
Ether’s weekly performance. Source: TradingView

“By the way, ETH is up 60% in the first 14 days of the year,” Real Vision founder Raoul Pal noted, hinting that he would be paying attention to alts going forward. 

“I think it outperforms all year but I still own much more BTC but have been adding to ETH. Next stop will be higher risk alts…. but much much smaller. More risk = smaller size.”

Macro factors meanwhile failed to have a decisive impact on crypto. President-elect Joe Biden’s announcement of a $1.9 trillion stimulus package did not trigger lasting up or down moves for Bitcoin, with the dollar itself steady heading into the weekend.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.